Browsing by Subject "stress tests"

Sort by: Order: Results:

Now showing items 1-2 of 2
  • Kauko, Karlo; Laakkonen, Helinä; Kiviniemi, Arttu; Nyholm, Juho (2021)
    Bank of Finland. Bulletin 1/2021
    Stress tests are important analytical tools that measure the resilience of banks to sudden, dramatic disruptions to the operational environment. The Bank of Finland and the Financial Supervisory Authority (FIN-FSA) have together developed a new stress testing framework as a more flexible means of testing the loss-absorbing capacity of banks when facing certain local systemic risks. The tool can also be used, for example, when setting macroprudential (capital) buffers.
  • Moreno, Diego; Takalo, Tuomas (2021)
    Bank of Finland Research Discussion Papers 3/2021
    We study the optimal precision of public information disclosures about banks assets quality. In our model the precision of information affects banks' cost of raising funding and asset profile riskiness. In an imperfectly competitive banking sector, banks'stability and social surplus are non-monotonic functions of precision: an intermediate precision (or low-to-intermediate precision if banks contract their repayment promises on public information) maximizes stability, and also yields the maximum surplus when the social cost of bank failure c is large. When c is small and the banks' asset risk taking is not too sensitive to changes in the precision, the maximum surplus (and maximum risk) are reached at maximal precision. In a perfectly competitive banking sector in which banks' asset risk taking is not too sensitive to the precision of information, the maximum surplus (and maximum risk) are reached at maximal precision, while maximum stability is reached at minimal precision.